Computers Find Growing Role In Vending Sales Analysis

U.S.A. - Computers suitable for use by small and medium-sized businesses became available a quarter of a century ago. While their initial use in vending was to tighten control by speeding the reconciliation of machine inventories with collections, some observers always envisioned their use in tracking line-item vending machine sales.

The initial concept was appealing, and remains so today. If operators can determine exactly what each machine has sold, and in what quantities, with the same speed as they can obtain collection information, it becomes possible to fine-tune vender menus to eliminate the slowest sellers and make sure that the fastest-turning items do not sell out.

The difficulty, during the first phase of industry computerization, was in collecting column-level sales data. Good route drivers developed a feel for the machines they serviced, but they did not have the time to write down detailed brand information. Moreover, operators making the transition to multi-price equipment often felt that they had enough to do in analyzing sales by price level, without having to contend with specific product data.

The answer obviously was to automate the capture of the data as well as its analysis. Again, this proved easier to do for collection data, which could be obtained simply by recording the vend enabling signals from the coin mech.

Given a vending machine with a controller that can record the activation of each spiral individually, the challenge is to find a way to relate the changing content of each spiral to that information. The solution has been the handheld computer, displaying a prescribed load plan that the driver follows, entering the quantity of each item loaded. Given software that allows the driver to enter any substitutions that may be required, and a system that can retrieve data automatically over a DEX connection, if one is available, the handheld has proven to be the essential bridge between manual and automated information retrieval. And, of course, producing or retrofitting vending machines so they are able to communicate with handheld computers also makes it relatively simple to equip them to send data over a modem to a remote computer, by means of a landline or a wireless link.

TIME CONSTRAINT

Alan Kronenberg, CompuVend Systems, pointed out that a difficulty about line-item sales analysis is that someone has to do it. This difficulty exists even if every machine is able to load data up automatically. Even with well-designed software preparing reports that list the items in a machine by frequency of turns, it takes a certain amount of time to study those reports; and that time adds up if there is a substantial amount of equipment in the field.

And the impact of one or two selections on total machine earnings seems very slight, since no one item in a 42-column snack machine represents impressive weekly dollar sales. The value of line-item sales analysis and corrective menu adjustment has to be understood in terms of a large number of machines over longer periods, the vending veteran noted; an extra seven or eight sales per week from every machine certainly do add up. And, of course, there are costs associated with merchandise that does not sell. These, too, are subtle but real.

If the task of continually analyzing data seems daunting, Kronenberg pointed out that it need not be done for every machine on every service. Analyzing one route at a time at (say) monthly intervals, on a rotating basis, would not take very long and, again over time, could yield very positive results. Starting small and working methodically can allay the fear that valuable personnel will disappear in a sea of sales data.

Kronenberg added that the other way of menuing a machine, the venerable planogram, calls for determining a standard load plan for every location. This is the opposite approach to machine-level sales optimization. He believes that, in time, the resolution will be a "half-planogram," with certain items proving popular everywhere and forming the core, while others are selected according to location-specific sales data. Given well-defined categories and the analytical tools to allocate space to each according to location preference, this would allow the operator to manage those categories, adjusting space to sales and increasing inventory turns.

A necessary first step is making sure that all an operator's machines are DEX capable, so they can capture and upload information automatically. Kronenberg observed that this is becoming easier to do, as more new machines have well-implemented DEX capabilities and older ones can be fitted with data capture modules of the sort developed and marketed by Audit Systems Co. (Timonium, MD).

Vendors benefit in several ways from DEX-readiness, the CompuVend founder added. Not only can their drivers save time and tighten control by using handheld computers to retrieve collection and sales data automatically, but a DEX port permits easy connection of a wireless device to the vending machine.

One such device is CompuVend's "Buzz Box," introduced nearly two years ago and now in its "C" version. This is a simple modem and RF transceiver that allows drivers to poll the machines in a location from curbside to obtain a list that shows exactly what products are needed. By eliminating the need for a preliminary walk past the machines, this can save a great deal of time. "

Buzz Box" software also accommodates a situation in which a few sales are made between the time a machine is polled and the time the driver opens its door. The collection total is incremented automatically and the sales are subtracted from inventory, so the driver need make no manual adjustment to account for the transaction.

WORKING SMARTER

Kronenberg reported that more than 270 "Buzz Box" systems are now in use, and he expects about 400 to be in the field by the time of the National Automatic Merchandising Association National Expo. A new version, "Buzz Box 4+," is slated to debut at the NAMA show; it can concentrate and transmit the data from as many as four contiguous vending machines with a single transceiver.

The CompuVend founder suggested that a route supervisor logically might be responsible for keeping track of sales and working to maximize them. However, in today's tight labor market, most route supervisors spend much of their time running routes, and do not do much supervising

But he knows of at least one operating company that has hired a "cash cop" whose specific duty is to interview the driver when a collection does not tally with inventory data, and to pinpoint the cause of the discrepancy. The value of this immediate positive response to shortages is worth the cost of filling the post, and the same might prove true of a sales optimizer. In some cases, Kronenberg speculated, the same individual might perform both functions.

Bob Johnson of EMS Solutions observed that route drivers can, and do, use handheld computers to obtain item-level sales information without retrieving it automatically from the vender over a DEX connection. Drivers who do this, he said, are those accustomed to walking past the machines once to determine what items they need to bring in, then returning to the truck to get the merchandise. This method involves making notes, traditionally with paper and pencil; a handheld computer is no more time-consuming, and can record the information for later upload and analysis.

Drivers who make a rough projection of need and bring in a preloaded cart, on the other hand, have no need to enter information about machine fills, and requiring them to do so often is not regarded as a productive use of their time, Johnson pointed out.

Many operators recognize that there are potential benefits to obtaining more detailed sales information, but they cannot quantify the benefits, while they see the costs very clearly. Thus, Johnson reported, more and more vendors are upgrading their software to accommodate handheld data collection systems, so they will be ready when they decide that the time is right to act; and the use of handhelds also is increasing. However, the pace of upgrading machines for DEX data capture and retrieval lags well behind.

A few operations are entirely DEX-capable, Johnson noted, and many more have upgraded one or two routes. Many operators making some use of DEX are at present using it only as an improved method of collecting cash audit information. Still, there are operators presently collecting line-item sales information from their machines, and their numbers are certain to increase.

The alternative to informed adjustment of machine menus to match the preferences of patrons is some sort of planogram, based on a broad-brush assessment of what items sell well in a particular market. For such an approach to work acceptably, Johnson said, it should leave a certain amount of discretion to the driver.

NICHE MARKETS MULTIPLY

This is a traditional way to menu vending machines, the EMS Solutions executive recalled, but it is becoming less and less satisfactory. "The diversity among accounts is increasing; vending locations are not just factories any more," he told V/T. "There are more and more products available, and cultural diversity is increasing all the time." The lowest common denominator is becoming hard to find.

Thus, the old standard planogram does not maximize sales, and vendors need a comprehensive method of monitoring sales continually, as mass-market retailers and leading convenience store chains do. That method is automated collection and retrieval of sales data for timely analysis, analogous to the networked electronic cash registers and barcode scanners used by supermarkets and other high-volume retailers. The adoption of the DEX standard by the National Automatic Merchandising Association makes this goal attainable in vending.

There are obstacles that must be overcome. Of the approximately five million vending machines on location, probably not half a million came from the factory with DEX capability built in; and of those, the earlier ones often were supplied with a limited implementation. It is not difficult to upgrade nearly any machine produced in the last 20 years, by installing a data capture module like those produced by Audit Systems Co.. And the inconsistencies in early onboard DEX systems can be resolved, as industry software suppliers have spent a great deal of time and effort to make certain that their handheld tools will work reliably with their customers' varied equipment.

But there is a cost to doing these things, and many vendors who may recognize the potential benefits remain unwilling to incur that cost.

Johnson suggested that operators , even those not presently using automated data retrieval, can convince themselves of the value of ongoing, detailed sales analysis by selecting one machine on location for detailed study. All that would be needed is systematic replacement of slow-moving items, keeping track of the effect of each change, and working steadily to maximize sales. The results could be multiplied by the number of machines on location, and projected over time. "Then, if you found that it worked, you could go ahead and automate it," he added.

And the situation is improving, although slowly. The vending industry tends to take very good care of its equipment, which thus has a long useful life. Still, every year a certain number of machines, principally the oldest ones, are replaced by new production. And Johnson reported that the vending industry data transfer standard (the version of DEX adopted by NAMA and the European Vending Association) is becoming more rigorous as the industry gains experience.

"The original standard is loose," the EMS Solutions executive explained. The data stream is very large, there are a great many labeled data fields, and the transmission protocol allows for some variation. It has taken a while to work through the early versions, identifying and solving problems while determining what improvements to the standard are required.

IT'S WORKING

And operators who are making the effort to launch and refine an automated data collection system are enjoying revenue gains, Johnson reported, Many more are thinking about it, and expect to be doing it sooner or later. EMS Solutions customers are buying into handheld computers in growing numbers, perhaps because these have immediate value as electronic route tickets plus their future value as tools for automatic data retrieval.

Over the past two years, EMS Solutions has upgraded and enhanced its handheld computer application to run under Microsoft "Windows," and it is finding favor with the growing number of operators who are adopting handheld computers.

The widening interest in wireless machine monitoring gives operators another incentive to work towards establishing DEX capability for all their machines, Johnson said, since the DEX interface is the means by which the vending machine exchanges information with any accessory communication system.

As vendors recognize the value of increasing sales and customer satisfaction by more sophisticated menuing, while reducing costs by enabling drivers to work more efficiently, automated data capture will become increasingly widespread and popular, Johnson predicted.